18th Oct 2021 08:14
(Alliance News) - Thungela Resources Ltd on Monday cut its coal export guidance as operations may be constrained by South Africa's state-owned logistics company, Transnet SOC Ltd, whose rail infrastructure continues to deteriorate.
Thungela shares sunk 8.4% to ZAR77.01 each in Johannesburg early on Monday morning, and were down 9.1% to 377.40 pence each in London.
Given the current and expected rail performance levels, some of Thungela's operations may become constrained as stockpiles are expected to reach full capacity from November, the coal producer said.
Thungela, which is listed on the London and Johannesburg stock exchanges, was formed after Anglo American PLC spun off its thermal coal business in South Africa in June.
Rail constraints come at an unfortunate time for Thungela as coal prices have soared recently due to the global energy crisis.
"Thungela continues to monitor rail performance and its potential impact on our operations, and to explore further actions that could be required to mitigate such impacts," the group said in a statement.
Full year 2021 export saleable production guidance has been moderated to between 14.8 million tonnes and 15.2 million tonnes, from 15.0 million tonnes and 16.0 million tonnes as previously guided.
Unless there is an improvement in rail performance, Thungela is expected to build additional export inventory stock levels of about 1.3 million tonnes during the second half of 2021.
Following an initial recovery in the performance of Transnet Freight Rail, a division of Transnet, subsequent to the annual maintenance shutdown in July, rail performance has continued to deteriorate in the second half.
"Thungela consequently implemented actions to mitigate the impact on our business," Thungela said, highlighting the third-party sales, which have been reduced from 926,000 tonnes in the first half to an anticipated 25,000 tonnes in the second half.
The group has also optimised its export equity sales mix, prioritising the railing of higher margin products, at lower volumes, recognising continued rail constraints.
In addition, Thungela said the local coal industry had assisted Transnet Freight Rail to implement improved security measures which are expected to contribute to an improvement in rail performance.
This follows several instances of cable theft and related rail interruptions.
By Artwell Dlamini; [email protected]
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